Microsoft update kills web application via namespace collision

In my work at the Academy of Natural Sciences of Drexel University, I administer a database server and web server for the Phycology Section (on which runs a bunch of REST web services on .NET 3.5) .  Today after downloading a number of Windows updates on the web server, one of the web services (here's an example) was broken.  The updates I had downloaded are shown here:
After investigating, I noticed a long, messy compile error that had not existed before, on a page in the cache which I had not created.  I stared at the error and the page until I began to understand that perhaps there was a name collision on the word "Site".  I had long used a master page called Site.master, so I changed it to Site1.master and repeatedly recompiled until all pages dependent on this master page had been changed to use the new name--after which the problem disappeared.

So answer me this.  How come an update to something in .NET 4 breaks a web service running on .NET 3.5?   And furthermore, how could anyone at Microsoft be dumb enough to suddenly purloin a common name such as "Site"?  Probably many programmers around the world are cursing and going through the same discovery process as I write this.  Bad Microsoft!  Bad!  Bad!